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Saturday, 03 March 2012, 08:20 GMT
Exxon announces 25-year oil deals with KRG
ExxonMobil's headquarters in Irving, TX./ PRESS PHOTO
The Kurdish Globe
Other oil conglomerates likely to follow Exxon Mobil
Exxon's entry into the region has doubled share prices of smaller companies with existing contracts.
Breaking months of silence, ExxonMobil, the world's largest oil company, announced in its annual report that it plans to explore oil in Kurdistan Region. The oil giant first disclosed information about its investment plans in an announcement back in November 2011 by the Kurdistan Regional Government Minister of Natural Resources. Due to the central government's outrage over Exxon Mobil's decision; however, the company remained silent about the contract and quietly began operations in the Region. The public announcement that it signed production sharing contracts (PSCs) with the KRG, allowing the company to explore and produce oil in six fields throughout the Region came on February 24.
"Exploration and production activities in the Kurdistan Region of Iraq are governed by production sharing contracts negotiated with the Kurdistan Regional Government in 2011," read the company's annual report. "The exploration term is for five years with the possibility of a two-year extension. The production period is 20 years with the right to extend for five years."
The central government of Iraq, which has long stood against KRG's oil activities and vowed to blacklist international oil companies working in the Region, excluded Exxon Mobil from the new round of bids for new exploration contracts in the south of the country. It threatened to cancel its service contracts in the south and to terminate the company's contract for West Qurna 1 oilfield, but Exxon is still operating in the field and recently raised production by about 150,000 barrels per day.
Exxon's contract is expected to be followed by other oil giants. TOTAL, the French giant, is considering investing in the Region as the KRG's production-sharing contracts become more attractive than the service contracts offered by Baghdad.
As the number of unlicensed blocs decreases in Kurdistan, newcomers are left with one choice, which is to buy the existing license holders.
Being the first contract signed with an international oil giant, Exxon's entry into Kurdistan Region had significant multi-dimensional impacts. While it outraged Baghdad and increased tensions between Erbil and the center, it simultaneously made the Kurds more confident in their oil activities and the future. But it was also a message to the central government that its package to oil companies is not competitive compared to the more generous Kurdish package. The most recent impact, which became apparent after the publication of Exxon's annual report, was the soar in the share prices of the existing small and medium oil companies.
Tony Hayward, the CEO of Genel Energy, the largest producer of oil in Kurdistan Region, said that Exxon Mobil's entry into the industry has doubled the share prices of some oil companies operating in Kurdistan Region. Speaking at a press conference, he said that due to the rise in price, they are no longer planning to buy shares of Gulf Keystone and DNO.
"We do not intent on doing another big deal in Kurdistan Region. Anyone who thinks we're going to go and buy DNO is wrong; we're not," Hayward told reporters at a media briefing on Thursday, February 23. "The thing that changed it most is that Exxon arrived; 100 percent inflation in six months. DNO has doubled and GKP has doubled."
Genel is now moving focus toward the Middle East and Africa to invest its $1.9 billion in cash. "I think we'd be competitively advantaged because of our Turkish brand and our Turkish background in North Africa, because the role that Turkey's playing in helping those countries creates a new future," Hayward said.
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Exxon announces 25-year oil deals with KRG
ExxonMobil's headquarters in Irving, TX./ PRESS PHOTO
The Kurdish Globe
Other oil conglomerates likely to follow Exxon Mobil
Exxon's entry into the region has doubled share prices of smaller companies with existing contracts.
Breaking months of silence, ExxonMobil, the world's largest oil company, announced in its annual report that it plans to explore oil in Kurdistan Region. The oil giant first disclosed information about its investment plans in an announcement back in November 2011 by the Kurdistan Regional Government Minister of Natural Resources. Due to the central government's outrage over Exxon Mobil's decision; however, the company remained silent about the contract and quietly began operations in the Region. The public announcement that it signed production sharing contracts (PSCs) with the KRG, allowing the company to explore and produce oil in six fields throughout the Region came on February 24.
"Exploration and production activities in the Kurdistan Region of Iraq are governed by production sharing contracts negotiated with the Kurdistan Regional Government in 2011," read the company's annual report. "The exploration term is for five years with the possibility of a two-year extension. The production period is 20 years with the right to extend for five years."
The central government of Iraq, which has long stood against KRG's oil activities and vowed to blacklist international oil companies working in the Region, excluded Exxon Mobil from the new round of bids for new exploration contracts in the south of the country. It threatened to cancel its service contracts in the south and to terminate the company's contract for West Qurna 1 oilfield, but Exxon is still operating in the field and recently raised production by about 150,000 barrels per day.
Exxon's contract is expected to be followed by other oil giants. TOTAL, the French giant, is considering investing in the Region as the KRG's production-sharing contracts become more attractive than the service contracts offered by Baghdad.
As the number of unlicensed blocs decreases in Kurdistan, newcomers are left with one choice, which is to buy the existing license holders.
Being the first contract signed with an international oil giant, Exxon's entry into Kurdistan Region had significant multi-dimensional impacts. While it outraged Baghdad and increased tensions between Erbil and the center, it simultaneously made the Kurds more confident in their oil activities and the future. But it was also a message to the central government that its package to oil companies is not competitive compared to the more generous Kurdish package. The most recent impact, which became apparent after the publication of Exxon's annual report, was the soar in the share prices of the existing small and medium oil companies.
Tony Hayward, the CEO of Genel Energy, the largest producer of oil in Kurdistan Region, said that Exxon Mobil's entry into the industry has doubled the share prices of some oil companies operating in Kurdistan Region. Speaking at a press conference, he said that due to the rise in price, they are no longer planning to buy shares of Gulf Keystone and DNO.
"We do not intent on doing another big deal in Kurdistan Region. Anyone who thinks we're going to go and buy DNO is wrong; we're not," Hayward told reporters at a media briefing on Thursday, February 23. "The thing that changed it most is that Exxon arrived; 100 percent inflation in six months. DNO has doubled and GKP has doubled."
Genel is now moving focus toward the Middle East and Africa to invest its $1.9 billion in cash. "I think we'd be competitively advantaged because of our Turkish brand and our Turkish background in North Africa, because the role that Turkey's playing in helping those countries creates a new future," Hayward said.
[You must be registered and logged in to see this link.]
